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outlook


“The Chain Stops Here!” Suppliers: Insource to increase value and profi ts


T


he forecast of 27,000 new passenger aircraft be- tween now and 2025 is both delightful and frightful news to the global aerospace supply chain. Gener-


ally, the farther down the chain the work goes, the more costs are squeezed. As such, particularly at the Tier Two and Three levels, overhead is often sacrifi ced in terms of facility upkeep, capital equipment investment, and staff development—what are often referred to as a company’s tribal knowledge. Some suppliers at this level go to a machine tool builder or distribu- tor and have that company design, build, and install a turnkey FMS system into the supplier’s facility, complete with part programs, cutters, and fi xtures. While this approach might be a brilliant solution for that one project, and it might even last fi ve years before it ends or another company steals the work, it’s not the best way to play on the runway if suppliers want to be in this business 15–20 years from now. If a company desires to rise up through the chain by truly increasing its value to the upper levels of the chain and make better mar- gins then that company needs to begin to “insource”. Our company, Mitsui Seiki, has had the privilege of provid-


ing hard metal cutting manufacturing technology solutions to OEMs and to every tier level in the global aerospace supply chain for the last 30 years. As the OEMs and Tier Ones are ever more carefully scrutinizing their suppliers, I’m sensing nervousness and hesitation to release orders, even though they are under tremendous pressure to do so. I’m sensing worry. They see facilities with weak infrastructures, 20-year-old machines that cannot do the complex work that’s required, seats of software eight releases old, and people getting close to tapping into their IRAs. Of course, they see many bright, modern companies, too, with newer spindles ready to give 98% uptime and energized employees. Howev- er, the OEMs with their astounding number of orders in hand need so many more of those modern companies and vision- ary owners who build upon their capabilities, invest in staff, and become a vital, productive link in the chain. I understand that fi nancing is a problem. I know that attracting talent is a problem. Yet, rather than focusing on the diffi culties, I sug- gest companies be creative in fi nding solutions. How about


Scott Walker President


Mitsui Seiki USA Inc. Franklin Lakes, NJ


fl ying the banker out to Seattle and take her on a tour at Boe- ing? Arrange a meeting with industry experts and purchasing agents. Help her understand the aerospace business and the current boom that will extend for the foreseeable future. The OEMs are pacing their requirements; they understand the need for suppliers to tool up while they do the research with companies like Mitsui Seiki to determine how to make these parts and relay the parameters—for example how best to machine the new Ti Beta 21 material and what makes sense for the next generation of hard metal machines, 3D printers, and hybrid technology that offers subtractive and additive components. They want their suppliers to tool up be- cause once assembly is underway, they need perfect parts, perfectly timed, and perfectly priced—akin to the way cars are produced.


Once assembly is underway, OEMs need perfect parts, perfectly timed and priced.


The companies that are most successful and profi table in the chain have developed at least some of the applica- tions engineering and programming capabilities that other companies outsource to the machine tool builder or distribu- tor. There are creative options to attract talent and it could be a matter of timing. For instance, hire an engineering intern while he or she is still in college—before that student gradu- ates and steps onto a career path. Place that person into the thick of it. If they didn’t take the manufacturing track in school it opens up a whole new dimension for them. Build on that program. Also, capture the knowledge of your older workers at the same time. Document everything they do and why they do it that way. It’s a daunting task. Start now in short weekly sessions.


Investing in a sophisticated FMS, which has been de- signed and built around a specifi c application—and that re- ally works—can get you in the game. In fact, we can help you with that. However it’s not the way to stay there. Insource. Build tribal knowledge. Develop the philosophy of, “the chain stops here.”


39 — Aerospace & Defense Manufacturing Year


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